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What to do with your 401 (k) when you change jobs

Posted on January 16, 2019

Not surprisingly, the most common thing workers do when they change jobs and leave a retirement plan behind is … nothing. The reason? They assume the process is complicated and they will get to it “sometime.”

Because job turnover is increasingly common, leaving a trail of old retirement investment plans behind is a big problem for many reasons. First, it’s easy to lose track of multiple plans. It’s also difficult to effectively manage multiple plans, each with its own fund lineup and administrative fees. The bottom line is, letting a retirement plan or plans languish will probably cost you in fees and lost potential retirement revenue.

There’s another emotional factor at play here. Disorganization. Disorganization is a major cause of financial stress. This issue always seems to rise to the top of everyone’s “money concerns” list, no matter what their asset level. Financial disorganization and maintaining too many accounts are, without question, among the most commonly cited stressors.

The good news is that, in general, rolling funds out of an old 401(k) plan and into an IRA takes much less time than you might think. Before you make the call or go online with previous employers, find the best plan for your current needs. Talk to an advisor to brush up on what plans are ideal for you, considering your age, resources and risk assessment strategy. Set aside uninterrupted phone or online time to roll each of your old 401(k)s and 403(b)s (checking regulations and rules) into the same one or two plans. Your financial advisor may even be able to help you with this.

This is the absolute best way to stay on top of your retirement savings and make the most of your funds. Be sure to file all your paperwork (including passwords) safely, so you know where the information is come tax time.

Having all or most of your accounts at one financial institution may seem minor, but it is a critical part of personal financial management. Without it, it is difficult to know where you stand financially, not to mention maintaining a cohesive investment strategy.

Your next order of business? Make a calendar commitment to log in periodically to monitor any fund changes and rebalance your portfolio.

Although it can become complex in certain situations, for the majority of ex-employees the rollover process is fairly streamlined. If you have any questions or concerns about the process, give us a call. We can help with any questions you may have.